Giverny Capital Exits Align Technology, Citing AI Stock Shift and Market Dynamics

In its recently released fourth-quarter 2025 investor letter, Giverny Capital Asset Management disclosed it has closed its position in dental technology company Align Technology (NASDAQ: ALGN). The move comes as the firm navigated a difficult period, with its portfolio returning a mere 0.01% in Q4 against the S&P 500's 2.66% gain. For the full year, Giverny's 12.58% return also trailed the index's 17.88% performance.

The firm attributed its relative underperformance to a market narrowly focused on a handful of mega-cap technology and AI leaders—a sector where Giverny's strategy is deliberately underweight. Instead, the portfolio is concentrated on smaller, niche industry leaders which, while showing strong fundamentals, have been overlooked by the AI-driven rally. "While our companies excel in earnings growth and capital returns, the market's current fixation is elsewhere," the letter noted, highlighting the disconnect.

Align Technology, known for its Invisalign clear aligners and iTero scanners, saw its shares decline over 25% in the past year, closing at $164.12 on January 29, 2026. The company's Q3 2025 revenue of $995.7 million showed modest year-over-year growth but a sequential dip. Giverny's letter stated that while Align retains long-term potential, the firm sees "greater upside potential and less downside risk" in select AI stocks, prompting the reallocation.

The decision reflects a broader tension in asset management between sticking with proven, fundamentally sound companies and chasing the explosive, albeit volatile, growth narrative surrounding artificial intelligence.

Investor Reactions

Michael Thorne, Portfolio Manager at Sterling Trust: "Giverny's move is a pragmatic, if painful, recalibration. The market is rewarding narrative over nuts-and-bolts execution right now. Exiting a position like ALGN, which has faced headwinds, to deploy capital into higher-conviction themes is simply active management at work."

David Chen, Dental Industry Analyst: "This seems short-sighted. Align has a virtual monopoly in clear aligners and its scanner business is a key gateway for digital dentistry. Current pressures are cyclical, not structural. Selling near a 52-week low may be a regret in 18 months."

Sarah Jenkins, Independent Investor: "It's another example of herd mentality! Funds talk about 'long-term value' but panic and sell solid companies the moment they underperform for a few quarters. This chase after 'AI everything' is creating bubbles and punishing real businesses that make actual products."

Rebecca Foster, Financial Advisor at Horizon Planning: "For our clients, this underscores why diversification across strategies is key. Giverny's concentrated, high-conviction approach will have periods of underperformance. The real question is whether their thesis on the AI stocks they're rotating into proves correct."

Disclosure: This analysis is based on public investor communications and is for informational purposes only. It is not investment advice.